Our School District Owes $1.7 Million. Here’s What Happened.



Due to multiple clerical errors that occurred while depositing payroll taxes, the school district was fined $1.7 million in penalties by the Internal Revenue Service (IRS).

Alexandra Chu

On March 30, 2022, the Board of Education (BOE) revealed that Scarsdale Public Schools had been fined $1.7 million in penalties by the Internal Revenue Service (IRS) due to multiple clerical errors that occurred while depositing payroll taxes. The timing of this surprising revelation in correlation with the departure of Superintendent Thomas Hagerman and the lack of public information has left residents with more questions than answers.


According to a statement released after a Board of Education (BOE) meeting on March 30, 2022, “errors resulted in a late payment in the first quarter of 2020 and misallocating certain third and fourth quarter 2020 payments to the second and third quarters 2020, respectively.” led to the IRS filing a federal tax lien—a legal claim to assets until owed taxes are repaid—totaling $1,309,118.34. A separate error in 2021 led to a $412,837 penalty plus interest, bringing the total amount owed to $1,722,473. Of the $1.7 million, the District has agreed to pay $843,558 and is seeking a refund for the rest.


How did such major errors occur? According to Board President Karen Ceske’s opening statement during the Board meeting on April 4, the mistake happened “when keying a Q1 deposit into the payment system.” What is not explained is why the district’s accountants and auditors failed to notice the late payment or why the board is now considering whether or not to hire the same auditors, Cullen & Danowski, LLP, to examine the issue. The aforementioned independent accounting firm, which has done the district’s audits for over a decade, did not immediately respond to Maroon’s requests for comment. A decision regarding the proposed audit is expected to be made before May 9.


On April 20, the BOE passed a motion to appoint Anthony J. Brock, Esq. to “conduct an investigation of the IRS payroll tax issue beginning Monday, April 25th.” Still, some Scarsdale residents expressed outrage over the seeming lack of urgency and transparency. “It took them three weeks [to hire Brock] from when they found out they had been kept in the dark for over a year,” said Robert Berg, a Scarsdale-based attorney who is active in the school community and has knowledge of the BOE matters. “I would’ve hired an outside investigator within a week or a day or three days. They waited over three weeks to do that.” On the other hand, the BOE stressed the importance of robust understanding before making any decisions regarding the issue. The Board did not respond to requests for comment, and Brock declined to comment on the case.


For many residents, however, the biggest problem is the District’s lack of transparency and accountability both with the BOE and with the public. Despite having negotiated with the IRS since June of 2021, the District didn’t notify the Board of the tax issue until March 25, 2022, even after the IRS filed a lien in October 2021. The Board, in turn, has released very few statements to the public regarding the matter. Most residents were not even aware of the district’s tax issues until recent reports, especially since District officials have declined to answer questions.


But questions are the only thing on people’s minds. What was Dr. Hagerman’s involvement—if any—in the issue? (Hagerman declined an interview with Maroon, and his attorneys could not be reached for comment.) Why wasn’t the BOE made aware of the tax lien until March? What are the reasons behind the lack of transparency in this case? When will the affair be settled? And most importantly, what will happen next?